Without tax management of their investments, taxable investors realize a “tax drag” that hurts their wealth accumulation, compounding over time. We actively trade portfolios throughout the year to outperform investors’ chosen benchmark on an after-tax basis while managing active risk.
Benefits
Customized to Meet Investors’ Investment and Tax Goals
Focused on Generating After-Tax Alpha While Managing Risk
Direct Access to Skilled Portfolio Managers
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Principles of Investing
Take Advantage of Volatility, in Every Market Environment
When global markets decline, tax-savings opportunities are prevalent, but those events are less frequent. Finding opportunities within up markets is critical to generating a higher after-tax capital base.
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U.S. Equity Positive and Negative Performing Stocks (Annually)
Historical trends are not predictive of future results. Source: Bloomberg, Northern Trust Asset Management. Data from January 1, 2001 to June 30, 2023. U.S. Equity is represented by the S&P 500 index. It is not possible to invest directly in an Index.
Principles of Investing
Take a Multi-Dimensional Approach to Maximize After-Tax Growth
Asset transitions can create large tax liabilities and unnecessary gains if managed as a one-off event – performing regular analysis across investor-specific scenarios is necessary to ensure assets can be optimally transferred, as needed.
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Sample Asset Transitioning Options and Outcomes
This information is general in nature and should not be construed as tax advice. Please consult a tax advisor or professional as to how this information may affect your particular circumstances. For Illustrative Purposes Only. Tax rates assumed to be 40.8% ST, 23.8% LT. The rebalancing scenarios presented above are based on the individual equity holdings in the portfolio. The initial portfolio holds 223 names with a market value of $13.19 M and has 334 bps of active risk relative to the S&P 500 index. Past performance is no guarantee of future results. Index performance returns do not reflect any management fees, transaction costs, or expenses. It is not possible to invest directly in any index.
Principles of Investing
Tailor the Strategy to the Investor
Creating true after-tax alpha requires a personalized approach – even the most efficiently managed U.S. equity strategies could leave you with 10%+ tax liability.
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Hypothetical Growth of $1 Million for Most and Least Tax-Efficient U.S. Equity Managers – Last 15 Years
Source: Northern Trust Asset Management, Morningstar, as of August 31, 2023. Managers from Morningstar U.S. Equity universe were divided into quartiles based on their Tax-Cost Ratio over 15 years. The average annualized total returns and post-tax returns (pre-liquidation) we used to calculate the hypothetical growth of $1 Million investment in each group over the 15 year time period. The difference in the total return growth and the post-tax return growth represents the total average 'tax cost' for each group of managers.
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Define Investment Universe
Begin with a published or custom index, chosen by the client
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Build Portfolio to Balance Client Objectives
Customize for unique portfolio exposures and constraints, client tax profile, and transaction costs
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Optimize for Greatest After-Tax Return
Focus on client objectives, tax regulations, deferring gains, harvesting losses, and costs
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Daily Review and Regular Trading for Tax Savings and Risk Management Opportunities
Maximize tax-reduction while managing estimated tracking error to selected benchmark
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Who it's for
Taxable Investors Seeking Higher After-Tax Wealth
Capital gain and loss management leads to a lower tax burden and greater wealth accumulation.
Investors Seeking Lower-Cost Portfolio Events
Managing tax impact when funding an account with existing assets, rebalancing or raising cash reduces liability.
Investors Seeking a Personalized Portfolio
The ability to incorporate custom restrictions, ESG and factor preferences leads to a truly customized product.
Portfolio
Select a Strategy
Strategy Name
eVestment Universe
Benchmark
Inception Date
Investment Vehicles Available
Team Expertise
We measure success as achieving investor outcomes and delivering an exceptional client experience.
U.S. Election: Prepare Now for Potential Tax Shifts
Our analysis explores how potential post-election tax policy changes might impact dividends, capital gains, and municipal bonds and how investors might prepare for different election outcomes.
U.S. Election 2024: An Analysis of the Tax Scenarios for Investors
With the election looming, investors should prepare for potential changes in tax policies, particularly given the impending sunset of the 2017 Tax Cuts and Jobs Act.
Interested in learning more about our investment strategies?
All securities investing and trading activities risk the loss of capital. Each portfolio is subject to substantial risks including market risks, strategy risks, advisor risk, and risks with respect to its investment in other structures. There can be no assurance that any portfolio investment objectives will be achieved, or that any investment will achieve profits or avoid incurring substantial losses. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Risk controls and models do not promise any level of performance or guarantee against loss of principal. Any discussion of risk management is intended to describe NTAM’s efforts to monitor and manage risk but does not imply low risk. This information is general in nature and should not be construed as tax advice. Please consult a tax advisor or professional as to how this information may affect your particular circumstance.
Not FDIC Insured | May Lose Value | No Bank Guarantee
Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
